Cubist shares jump on 2Q profit, raised guidance

Shares of Cubist Pharmaceuticals Inc. jumped Friday after the company's adjusted second-quarter earnings surged past Wall Street forecasts on a 46 percent boost in sales of the antibiotic Cubicin.

The stock rose $1.13, or 5.7 percent, to $20.95 in afternoon trading. Shares have traded between $16.54 and $25.72 over the past 52 weeks.

Late Thursday, the company said earnings per share, excluding a charge for a licensing deal, reached 35 cents per share on revenue of $101.8 million. Analysts polled by Thomson Financial expected a profit of 10 cents per share on revenue of $98 million.

The company also raised its 2008 product revenue guidance to between $395 million and $405 million from prior guidance of $380 million to $395 million.

Cubicin, which is approved to treat skin and bloodstream infections, mainly in a hospital setting through intravenous infusion, was the company's only marketed product. In July, it made a deal to promote AstraZeneca's antibiotic Merrem in the U.S., in exchange for at least $20 million in annual revenue.

"Given its efficacy, tolerability and convenience profile, we look for Cubicin to continue its steady climb, particularly in the bacteremia and outpatient settings," Robert W. Baird analyst Thomas Russo said in a note to investors.

A decline in the use of the antibiotic vancomycin could help drive Cubicin sales past Cubist's long-term goal of $750 million within the U.S., he added, reaffirming a "Outperform" rating and raising the price target to $30 from $29. Cubicin is used to treat certain vancomycin-resistant strains of skin and other infections.

Meanwhile, Leerink Swann & Co. analyst Howard Liang reaffirmed a "Market Perform" rating, acknowledging the positive second-quarter report but raising concerns over potential patent challenges and additional antibiotic competition.

Goldman Sachs analyst Meg Malloy reaffirmed a "Neutral" rating and said she expects Merrem to bring in about $20 million in revenue annually for Cubist, while Cubicin continues gaining ground in the market. She reaffirmed a 32 price target.